Sri Lanka's central bank kept its benchmark interest rates unchanged for a third straight month to support economic growth, and said it doesn't expect to raise borrowing costs this year.
The Central Bank of Sri Lanka left the reverse re-purchase rate at nine per cent, the lowest level since November, 2004, and the re-purchase rate at 7.25 per cent, according to a statement on the Colombo-based bank's website yesterday.
"We seem to have no real reason to make any changes right now," Governor Ajith Nivard Cabraal said in a Bloomberg Television interview yesterday. "It looks like" rates will remain at this level going into 2011, he added. Cabraal, who cut rates in July and August, refrained from tightening monetary policy even as counterparts in India and Australia raised borrowing costs this month to counter price gains. Inflation in Sri Lanka is about half the average rate of the five years through 2009, helped by a surge in farm output after cultivation expanded following the end of a 26-year civil war in May 2009
"Inflation is expected to remain subdued at mid-single digits, on an annual average basis, by end-year," the central bank said. Sri Lanka's inflation is likely to end the year "very much less than" six per cent, after import taxes on some products were cut this month.
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